The goal of this proposal is to determine how cell type choices are made in mammalian development. Although cell type commitment is complex, in the past grant period we succeeded in experimentally distinguishing three phases: Competence, in which transcription factors endow multipotent cells with the potential to develop into one cell type or another; specification, in which signaling molecules control the cell type decisions; and differentiation, in which primary and secondary inductive signals are linked to ensure early cell differentiation and growth. As a model system, we study the differentiation of the definitive endoderm into liver and pancreas in mouse embryos. We found that HNF3 and GATA transcription factors endow endodermal competence for liver development, and that convergent FGF and BMP signals, from different mesodermal sources, divert uncommitted ventral endoderm from a default pancreatic fate to that for the liver. In the next grant period, we will combine molecular, in vivo-genetic, and embryo cell culture approaches to address unresolved issues in mammalian cell type control, with the following specific aims: 1. To determine how transcription factors promote and restrict developmental competence in the endoderm and in multipotent adult cells. 2. To determine how cell signaling pathways control a cell type choice for liver or pancreas. 3. To determine how secondary tissue inductive signals apparently stabilize cell type commitment and promote further differentiation and morphogenesis. Understanding how multipotent cells are specified to different tissue types is fundamental to organogenesis, tissue regeneration, and stem cell biology, and therefore human health and disease.